[Congressional Record Volume 144, Number 138 (Tuesday, October 6, 1998)]
[Senate]
[Pages S11572-S11577]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
[[Page S11572]]
INTERNET TAX FREEDOM ACT
The PRESIDING OFFICER. Under the previous order, the Senate will
resume consideration of S. 442, which the clerk will report.
The legislative clerk read as follows:
A bill (S. 442) to establish national policy against State
and local government interference with interstate commerce on
the Internet or interactive computer services, and to
exercise Congressional jurisdiction over interstate commerce
by establishing a moratorium on the imposition of exaction
that would interfere with the free flow of commerce via the
Internet, and for other purposes.
The Senate resumed consideration of the bill.
Mr. McCAIN. Mr. President, I ask unanimous consent it be in order for
an amendment to be offered by Senator Graham of Florida with a time of
30 minutes, 20 minutes on the side of the Senator from Florida, 10
minutes from the side managed by me.
Mr. GRAHAM. I would not object, but I add that there be no second-
degree amendments.
The PRESIDING OFFICER. Without objection, so ordered.
Amendment No. 3729
(Purpose: To require a supermajority of both Houses to extend the
moratorium)
Mr. GRAHAM. Mr. President, I send to the desk an amendment and ask
for its immediate consideration.
The PRESIDING OFFICER. The clerk will report.
The legislative clerk read as follows:
The Senator from Florida [Mr. Graham] proposes an amendment
numbered 3729.
The amendment is as follows:
On page 176, between lines 15 and 16, insert:
(c) Point of Order.--It shall not be in order in the Senate
or the House of Representatives to consider any bill,
resolution, amendment, or conference report if such bill,
resolution, amendment, or conference report would extend the
moratorium under subsection (a). This point of order may only
be waived or suspended by a vote of three-fifths of the
Members, duly chosen and sworn.
Mr. GRAHAM. Mr. President, as the amendment clearly states, its
purpose is to establish to the extent possible under our rules that the
moratorium, whatever this body decides its initial length will be, will
be that length and that we will not fall into a situation of a
``fluid'' moratorium, with efforts each year made to extend it further
and further. This amendment does not go to the issue of what the length
of the initial moratorium shall be.
The bill before the Senate today, which is the product of the Senate
Finance Committee, provides for a 2-year moratorium. There are
amendments filed which would extend that up to 5 or 6 years. There are
no amendments filed which would reduce the period of the moratorium. So
it is fair to suggest that we will be dealing with the moratorium of at
least 2 years, possibly longer. The purpose of this amendment is to
assure to the extent possible that once we have made that decision,
that will be the decision.
The underlying premise of this bill is an unusual one for the U.S.
Congress--not unique, but rarely used. That is, we are about to
consider legislation which would preempt every State and every local
government in this country, for a period of time, from exercising their
otherwise legal powers relative to taxation on Internet access and
transactions which are undertaken through the use of the Internet.
While it is perfectly appropriate for Congress to decide that the
Federal Government should not tax Internet access or Internet
transactions, I am concerned we will face a proposal that tells States
and local governments that they shall be denied the right to tax these
transactions.
The argument which I find to have some merit is that it is
appropriate we have a ``pause,'' a period in which we can determine
what is the appropriate means of taxing this new technology, and that
during that pause there should be a prohibition on State and local
governments imposing taxes on Internet access or Internet transactions.
What I am concerned about is that that pause does not become a
permanent slumber, an elongated sleep in which there is a prohibition
on State and local government's ability to exercise what is their basic
right under our constitutional allocation of responsibilities to raise
those revenues necessary to support necessary government programs.
The Federal Government has on many occasions passed legislation which
conditions the receipt of Federal funds. For instance, in the highway
bills we have frequently required the States to undertake a certain set
of actions, such as setting a speed limit or imposing the requirement
of seatbelts or motorcycle helmets or some other item which the Federal
Government felt was of sufficient import, that the ability of the State
to receive its otherwise due allocation of Federal funds would be
conditioned upon their adopting that policy. But in those cases, the
States have a choice. If a State believes the Federal requirement is so
onerous or so misguided that they will reject it, they can do so and
accept the consequences of some reduction in their Federal funds.
What we are deciding here today is that the States do not have such
an option. There will be a prohibition for the period of the moratorium
on the State's ability to exercise their policy relative to the
taxation of Internet access or Internet transactions.
What concerns me about this policy is its potential to ``morph'' from
being a temporary pause to being a permanent prohibition. What are some
of the risks that are involved in this? One of those risks is the
unknown, the unknown potential of this new rapidly developing
technology having implications to State and local governments which are
beyond our current ability to comprehend.
As an example, there is an emerging technology--it is not new, it is
in place but will probably become more prevalent--which is known as
Internet telephony which is essentially where the Internet system
substitutes for the normal local or long distance telephone lines as a
means of transmitting telephone services. This system, which is
currently in use on a limited basis, has the potential of being a very
major competitor with the traditional ways in which telephone service
has been delivered.
Probe Research, a telecommunications and data networking market
research system, forecasts that the demand for Internet telephony will
make these services add up to a $6.3 billion market by the year 2002.
That is just some 3 years from now. At that point, according to Probe
Research, Internet telephone and fax traffic will account for nearly 10
percent of total long distance traffic, a very significant high-growth
industry.
What does this mean for State and local government?
Telecommunications services and cable services are significant sources
of revenue for State and local government. The Finance Committee bill,
in fact, recognizes this by specifically preserving the Federal
Government's taxing authority over many of these areas and preserving
the taxing authority of State and local government for access to
telephone and cable services.
Unfortunately, the bill is vague regarding the treatment of such new
technologies as Internet telephony. While it specifically protects
Federal revenue, it does not clarify that the moratorium does not apply
to State and local governments with respect to Internet telephony. I
use this example because it is one that is before the Senate, an
example that the implications of allowing a specified moratorium to
become a longer-term prohibition could have implications on State and
local governments and on the fairness in the marketplace between
competing forms of commercial transaction, telecommunications, and
other aspects of our economy that will be affected that are beyond our
ability to currently estimate.
A second risk is that this moratorium will become ingrained into the
law. We have had multiple examples of where laws that were originally
passed as temporary moratoriums, or as a temporary benefit, have become
de facto permanent. In fact, before this session is over, we may be
considering what is referred to as an extender law, which is to add
additional months or years to a variety of tax benefits which were
initially adopted to have a specified time to limited life. But once in
place, once they have developed a political constituency, they have
become, for all intents and purposes, permanent provisions in our Tax
Code.
I am concerned that the same development of a political constituency
that has gotten used to the fact that they didn't have to pay any tax
for access, and particularly any tax on Internet transactions, will
develop here and
[[Page S11573]]
there and will be tremendous political pressure at the conclusion of
this moratorium, whenever that might be, for its extension.
Next, the potential of a long-term moratorium merging into
prohibition would create an imbalance on the commercial playing field.
I could foresee what is happening in a limited form becoming more
prevalent as retail stores begin to open a back office Internet sales
shop in order to be able to participate in tax-free Internet sales. So
what today is a relatively limited application has the potential of
becoming a much larger threat to fairness and parity in the commercial
marketplace and to a fundamental source of revenue for State and local
government.
Finally, the potential of the specified moratorium being extended
would delay or obviate the accomplishment of the very objective of
having the moratorium in the first place, which is to direct a
commission, representative of the various stakeholders in this issue,
to sort out the conflicting theories and practices and give us a
recommendation for some uniform, fair, nondiscriminatory Federal,
State, and local policies, as it relates to the use of the Internet as
a form of commerce.
So for all of those reasons, Mr. President, I am concerned, and I
think our Members should be concerned, about the prospect of the
moratorium, whatever length we finally decide is appropriate, becoming
a permanent prohibition on the use of State governments and of their
inherent powers relative to the Internet.
Finally, Mr. President, I think the period of time that is in the
Senate finance bill and the period of time that is proposed in various
amendments should be plenty to accomplish the objective of this study.
We have had a number of recent commissions that have been given a
specific time to accomplish their task.
Two or three years ago, the Congress established an Internal Revenue
Reform Commission. It gave that commission 18 months to look at an
agency as complex as the IRS. That commission actually completed its
work in 15 months, made its report, and this year Congress used that
report as the basis of probably the most sweeping reforms of the
Internal Revenue Service in a generation.
Last year, we established a Medicare Commission to look at one of the
most complicated, one of the most expensive, one of the most sensitive
programs that the Federal Government operates, the program that
finances the health care of some 35 million of our older citizens. We
gave that commission 18 months in order to issue its report.
So I suggest that the 2 years that are in the Finance Committee
recommendation are ample to carry out a much more focused study of the
tax implications of the Internet and that we should take this step by
adopting the amendment that I proposed to assure that this moratorium
will not morph into a permanent prohibition.
Mr. President, the fundamental issue here is the issue that underlies
this legislation, and that is the desire to have parity, equality, on
the commercial playing field among all forms of sales, whether they be
the Main Street seller or the remote seller or the cyberspace seller;
second, to assure that the Federal Government will not unduly intrude
into the areas of historic responsibility for State and local
government. It is appropriate for us to attempt to establish some
standards for uniformity of treatment and predictability of treatment.
It is not appropriate for the Federal Government to preempt State and
local governments from their ability to exercise what they think is
appropriate tax policy for their citizens.
So the amendment would provide that once the moratorium has been
completed, whatever its length, it would require a three-fifths vote of
each House to extend that moratorium for a further period.
I reserve the remainder of my time.
Mr. McCAIN addressed the Chair.
The PRESIDING OFFICER. The Senator from Arizona is recognized.
Privilege of the Floor
Mr. McCAIN. On behalf of Senator Mack, I ask unanimous consent that
Elaine Petty and Nancy Segerdahl, legislative fellows in Senator Mack's
office, be granted floor privileges during the week of October 5 for
consideration of S. 1868, the International Religious Freedom Act of
1998.
The PRESIDING OFFICER. Without objection, it is so ordered.
Privilege of the Floor
Mr. GRAHAM. Mr. President, I ask unanimous consent that Mary Jo
Catalano and Heather Landesman of my staff be granted floor privileges
for the pendency of S. 442.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. McCAIN. Mr. President, I urge my colleagues to oppose this
amendment. It circumvents the legislative process by requiring a
supermajority to extend the tax moratorium in the Internet Tax Freedom
Act, it would bind the hands of future Congresses, and it would start
setting a rather dangerous precedent.
Mr. President, the Senate has a supermajority mandate that applies to
all legislation; it is called a filibuster. Requiring three-fifths of
Congress to agree to adopt any future actions in this matter is
unnecessary, when all legislation considered and passed by the Senate
must essentially meet the test created by the filibuster.
This legislation before us, the Internet Tax Freedom Act, is an
excellent example of the proper manner in which legislation makes its
way to the Senate for full consideration and a final vote. This
legislation has been fully considered by the Commerce Committee,
referred to the Finance Committee, and Senator Wyden and I have worked
hard to address the concerns some Members have expressed.
S. 442 is before the Senate now, not because any extraordinary
measures have been taken, but because the bill has undergone the
legislative process as it was meant to function. This legislation is
before the Senate today because the majority of Senators support it and
a filibuster would have been defeated. There is no reason to institute
a supermajority for future actions on this issue, as Congress is fully
capable of addressing this issue under existing processes and
procedures.
I yield to the Senator from Oregon such time as he may consume.
The PRESIDING OFFICER. The Senator from Oregon is recognized.
Mr. WYDEN. Mr. President, I strongly urge my colleagues to oppose
this amendment. I think we are making substantial progress on this
legislation. I believe that in a few minutes Senator McCain and I are
going to accept something like seven or eight amendments that have been
offered in an effort to try to bring the parties together, and I would
like to see us continue to work in this spirit.
Mr. President, and colleagues, I introduced the Internet Tax Freedom
Act in March of 1997. Since then, this measure has been one of the most
hotly debated measures in this Congress--debated in both the Senate and
the House of Representatives. Through the course of this year and a
half discussion, never once has this idea been suggested--not in the
House nor in the Senate. And the fact of the matter is we are still
having important negotiations in order to get at the issue of how long
the moratorium ought to be. We are anxious to involve the Senator from
Florida in that effort. It would seem to me that our job--just as we
have tried to do with the seven or eight amendments which Chairman
McCain and I are going to accept in a few minutes--is to continue to do
our work in good faith. The Senator from Florida knows that I have gone
to considerable lengths to be supportive of his position with respect
to what would be studied by the commission in an effort to be
responsive to his concerns.
I would like to see us continue those discussions, both with respect
to what the commission will study and how long the moratorium ought to
be. When we arrive at that point, I and others believe that the
commission will do a thoughtful and responsible job. We think they are
going to work in good faith. If at any point they indicate that they
are unwilling to pursue their duties in that kind of fashion, the U.S.
Senate can get back at it.
I think it is important that the Senate reject this amendment and let
us continue in the kind of spirit that Chairman McCain and I have shown
with respect to the seven or eight amendments that are going to come up
very shortly that we have agreed to accept, and let us get this bill on
the President's desk.
[[Page S11574]]
The President of the United States is for this legislation, the
majority leader of this body, Trent Lott, is for this legislation, and
the minority leader, Tom Daschle, has said that he wants to see this
bill enacted. I think it is important that we reject this amendment and
move forward in good faith to work out the remaining issues.
Mr. President, I yield the floor.
The PRESIDING OFFICER. Who yields time?
Mr. GRAHAM. Mr. President, how much time do I have remaining?
The PRESIDING OFFICER. The Senator has 5 minutes 55 seconds. The
Senator from Arizona has 4 minutes 52 seconds.
Mr. GRAHAM. Mr. President, I also add my name to the list in favor of
the residual purpose of this legislation, which is a pause of
sufficient length to allow a serious study of the implications of
Internet technology to be a party in the commercial marketplace, and
the role of State and local taxation, as well as international and
Federal taxation on this new technology. The purpose of that latter
point is to achieve stability, predictability and uniformity in a way
in which Internet transactions and access is treated and to avoid there
being a discriminatory set of policies that are contrary to the
development of their important new technology. I believe the Senate
Finance Committee bill achieved that proper balance with a 2-year
moratorium.
What I am concerned about and what this amendment goes to is for that
brief pause not to become a permanent prohibition. For the reasons that
I have already cited--the rapidly changing nature of this technology
and its application, the potential for a constituency to develop that
would convert temporary into permanent, the basic unfairness of having
some forms of commerce subject to tax while others are given the
benefit of a moratorium, the inappropriateness of the Federal
Government preempting appropriate State and local judgments for
protracted periods of time--all have led me to suggest that we should
add to the 2-year moratorium, as it is currently written, an additional
protection, and that is at the end of that moratorium, if there is a
proposal to extend further, that it would take a 60-vote margin and an
equivalent percentage of votes in the House of Representatives in order
to do so.
That would give us some assurance that the objectives that are stated
will be achieved, but that this will not become the camel's nose in the
tent where eventually the whole body of the camel will be inside the
tent. We would be in the position of a permanent prohibition on legal
and appropriate policy decisions that have and should be made at the
State and local level for the purposes of maintaining not only fair
treatment in the marketplace but also the essential resources necessary
for State and local governments to carry out their responsibilities in
public safety, education and other critical areas.
Mr. President, I urge the adoption of this amendment, which I
consider to be wholly consistent with the objectives of this
legislation as stated by its sponsors.
The PRESIDING OFFICER. Who yields time?
Mr. McCAIN. Mr. President, I ask unanimous consent that the vote take
place at 5 o'clock.
The PRESIDING OFFICER. Does the Senator from Florida yield back time?
Mr. GRAHAM. How much time do I have remaining?
The PRESIDING OFFICER. Two minutes 42 seconds.
Mr. GRAHAM. Mr. President, I reserve the remainder of my time.
Mr. McCAIN. I withdraw my unanimous consent request. I yield such
time to the Senator from New Hampshire as he may consume.
The PRESIDING OFFICER. The Senator from New Hampshire is recognized.
Mr. GREGG. Mr. President, I rise to support the position of the
chairman of the committee on this issue in opposition to the Senator
from Florida.
The proposal which the Senator from Florida is suggesting goes really
to the essence of this debate, which is whether or not 30,000
municipalities and State agencies across this country are going to have
the right to essentially assess taxes in an arbitrary way on one of the
most dynamic vehicles of commerce that has never come forward in the
experience of the world. The chaos which those 30,000 municipalities
and State agencies would create should they be able to assess that type
of taxation on the Internet would be overwhelming. It might totally
defeat what has been one of the great engines of economic activity and
prosperity which our Nation has enjoyed over the last few years.
It is not a unique situation. We can go all the way back to John
Marshall to determine that the Congress has the right to make the
decision on the issue of policy relative to taxation in commerce. It
was, of course, Chief Justice Marshall who determined that when a ferry
was crossing a river between two States that that ferry could not be
taxed by the local State if it was going to interfere with interstate
commerce.
This concept has carried through our jurisprudence since that time--
that the Federal Government reserves the unique right to determine the
taxation of commerce.
There is no reason why we should arbitrarily handicap ourselves by
creating a supermajority within our own institution to exercise that
right, which is what the Senator from Florida is proposing.
Let's continue the policies which have done us so well in the area of
tax policy for the last 200 years, which is a majority of the Congress
to make a decision as to what tax policy shall be in international
trade. Let's not create some artificial barrier for us to jump over as
an institution as we try to deal with what is a tremendous real ferry
that may be created by having 30,000 municipalities and State agencies
across the country assess taxes against the Internet.
I yield the floor.
The PRESIDING OFFICER. Who yields time?
Mr. GRAHAM. Mr. President, I yield 2 minutes to the Senator from
North Dakota.
The PRESIDING OFFICER. The Senator from North Dakota.
Mr. DORGAN. Mr. President, I may not need the entire 2 minutes, but I
rise in support of the amendment offered by the Senator from Florida.
This issue is relatively simple. The whole purpose of a moratorium is
to take kind of a time-out and establish a commission and review a
series of these issues. But all of us here know how difficult it is
going to be when this moratorium, whatever it is, is to expire. We will
have people coming here saying this needs to be a perpetual thing; we
will continue the moratorium year after year after year. I want this
piece of legislation with its moratorium to represent that time-out; to
give this country time to make the right decisions. But at that point I
want the decisions to be made, and I want the moratorium to be gone.
That is what the Senator from Florida is saying. It is a very important
amendment.
I hope my colleagues will support this amendment so that we will
comply with what I think the true spirit of this legislation really
is--a time-out for thoughtful decisions to be made and then business as
usual. We don't want permanent preemption of the State's tax base. That
is what will happen if we don't decide now that this moratorium will
be--whatever it is. I hope it is 3 years.
Mr. GREGG. Will the Senator yield?
Mr. DORGAN. If I have time, I am happy to yield. Of course.
Mr. GREGG. Wouldn't the business as usual be that the majority would
take action rather than having a supermajority take place?
Mr. DORGAN. The Senator misunderstood my business-as-usual comment. I
was talking about the business as usual allowing a State to describe
its own tax base in a fair and thoughtful manner. My fear is that this
moratorium will continue forever, unless it becomes what we think it
should become--a time-out to make decisions, and then move on.
Mr. President, I yield the floor.
The PRESIDING OFFICER. Who yields time?
Mr. McCAIN. How much time do I have remaining?
The PRESIDING OFFICER. The Senator has 2 minutes 5 seconds.
Mr. McCAIN. I yield the remainder of my time.
The PRESIDING OFFICER. Does the Senator yield the remainder of his
time, 29 seconds?
[[Page S11575]]
Mr. GRAHAM. I yield the remainder of my time.
Mr. McCAIN. Mr. President, I move to table the Graham amendment.
I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.
The PRESIDING OFFICER. The question is on agreeing to the motion of
the Senator from Arizona. The yeas and nays have been ordered.
The clerk will call the roll.
The bill clerk called the roll.
Mr. FORD. I announce that the Senator from Ohio (Mr. Glenn) and the
Senator from New York (Mr. Moynihan), are necessarily absent.
The result was announced--yeas 83, nays 15, as follows:
[Rollcall Vote No. 299 Leg.]
YEAS--83
Abraham
Akaka
Allard
Ashcroft
Baucus
Bennett
Biden
Bingaman
Bond
Boxer
Brownback
Bryan
Burns
Cambell
Chafee
Coats
Cochran
Collins
Coverdell
Craig
D'Amato
Daschle
DeWine
Dodd
Domenici
Durbin
Enzi
Faircloth
Feingold
Feinstein
Frist
Gramm
Grams
Grassley
Gregg
Hagel
Harkin
Hatch
Helms
Hutchinson
Hutchison
Inouye
Jeffords
Johnson
Kempthorne
Kerrey
Kerry
Kohl
Kyl
Lautenberg
Leahy
Lieberman
Lott
Lugar
Mack
McCain
McConnell
Mikulski
Moseley-Braun
Murkowski
Murray
Nickles
Reed
Reid
Robb
Roberts
Rockefeller
Roth
Santorum
Sarbanes
Sessions
Shelby
Smith (NH)
Smith (OR)
Snowe
Specter
Stevens
Thomas
Thompson
Thurmond
Torricelli
Warner
Wyden
NAYS--15
Breaux
Bumpers
Byrd
Cleland
Conrad
Dorgan
Ford
Gorton
Graham
Hollings
Inhofe
Kennedy
Landrieu
Levin
Wellstone
NOT VOTING--2
Glenn
Moynihan
The motion to lay on the table the amendment (No. 3729) was agreed
to.
Mr. McCAIN. I move to reconsider the vote and I move to lay that
motion on the table.
The motion to lay on the table was agreed to.
Mr. McCAIN. Mr. President, I ask unanimous consent there now be a
period of morning business, with Senators permitted to speak up to 5
minutes each until 6:30 p.m.
Mr. BUMPERS. I object.
Mr. President, I send an amendment to the desk.
The PRESIDING OFFICER. The Senator from Arizona has the floor.
Mr. McCAIN. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. McCAIN. I ask unanimous consent that the order for the quorum
call be rescinded.
The PRESIDING OFFICER (Mr. Smith of Oregon). Without objection, it is
so ordered.
Mr. McCAIN. Mr. President, I ask unanimous consent the Senate now
move to a Bumper's amendment, with 10 minutes equally divided on either
side, followed by a rollcall vote if the Senator from Arkansas wants
it; I will make a motion to table; following that, that the Senate then
go into morning business, with Senators permitted to speak up to 5
minutes each until 6:30 p.m.
Mr. BUMPERS. I add to that, no second-degree amendments be in order.
The PRESIDING OFFICER. Without objection, it is so ordered.
Amendment No. 3742
(Purpose: To require persons selling tangible personal property via the
Internet to disclose to purchasers that they may be subject to State
and local sales and use taxes on the purchases)
Mr. BUMPERS. Mr. President, I send an amendment to the desk.
The PRESIDING OFFICER. The clerk will report.
The assistant legislative clerk read as follows:
The Senator from Arkansas [Mr. Bumpers], for himself, and
Mr. Graham, proposes an amendment numbered 3742.
Mr. BUMPERS. Mr. President, I ask unanimous consent reading of the
amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:
At the appropriate place, insert the following new title:
TITLE --CONSUMER PROTECTION TAX DISCLOSURE
SEC. . DISCLOSURE REQUIREMENT.
(a) Disclosure Requirement.--Any person selling tangible
personal property via the Internet who--
(1) delivers such property, or causes such property to be
delivered, to a person in another State, and
(2) does not collect and remit all applicable State and
local sales taxes pertaining to the sale and use of such
property.
shall prominently display the notice described in subsection
(b) on every other form available to a purchaser or
prospective purchaser.
(b) Disclosure Notice.--The notice described in this
subsection is as follows:
``NOTICE REGARDING TAXES: You may be required by your State
or local government to pay sales or use tax on this purchase.
Such taxes are imposed in most States. Failure to pay such
taxes could result in civil or criminal penalties. For
information on your tax obligations, contact your State
taxation department.''
(c) Regulatory Authority.--The Secretary of Commerce shall
issue and enforce such regulations as are necessary to ensure
compliance with this section, including regulations as to
what constitutes prominently displaying a notice.
SEC. . PENALTIES.
Any person who willfully fails to include any notice under
section ____ shall be fined not more than $100 for each such
failure.
SEC. . DEFINITIONS.
For purposes of this title--
(1) the term ``use tax'' means a tax imposed on or incident
to the use, storage, consumption, distribution, or other use
within a State or local jurisdiction or other area of a
State, of tangible personal property,
(2) the term ``local sales tax'' means a sales tax imposed
in a local jurisdiction or area of a State and includes, but
is not limited to--
(A) a sales tax or in-lieu fee imposed in a local
jurisdiction or area of a State by the State on behalf of
such jurisdiction or area, and
(B) a sales tax imposed by a local jurisdiction or other
State-authorized entity pursuant to the authority of State
law, local law, or both,
(3) the term ``person'' means an individual, a trust,
estate, partnership, society, association, company (including
a limited liability company), or corporation, whether or not
acting in a fiduciary or representative capacity, and any
combination thereof,
(4) the term ``sales tax'' means a tax, including use tax,
that is--
(A) imposed on or incident to the sale, purchase, storage,
consumption, distribution, or other use of tangible personal
property as may be defined or specified under the laws
imposing such tax, and
(B) measured by the amount of the sale price, cost, charge,
or other value of or for such property, and
(5) the term ``State'' means any of the several States of
the United States, the District of Columbia, the Commonwealth
of Puerto Rico, and any territory or possession of the United
States.
SEC. . EFFECTIVE DATE.
This title shall take effect 180 days after the date of
enactment of this Act. In no event shall this Act apply to
any sale occurring before such effective date.
Mr. BUMPERS. Mr. President, this is a very simple amendment. Forty-
five States have sales and use taxes on sales of merchandise coming
into their State from another State. The problem is, they can't collect
it because the people who are buying the merchandise don't know that
there is a sales tax on the goods coming in. I think Maine collects
about $1 million, and that is probably as much as any State collects.
People are always getting rude surprises. All of a sudden somebody
knocks on the door and they say, ``We saw where you just bought $50,000
worth of furniture from North Carolina. You owe sales tax.'' They say,
``The ad said no sales tax.'' ``I don't care what the ad says. There is
a North Carolina sales tax on merchandise brought in from out of
State.''
My amendment says on Internet sales, if you sell into a State, you
must notify people with a short notice that simply says, ``This
merchandise may be subject to a sales or use tax in your State.'' You
could be subject to a civil penalty or a criminal penalty--something
like 100 bucks. If you want to check, you should check with your local
revenue department to determine whether or not your State has a tax.
I want every Member in this body to ask this question: Why would you
vote against this when your legislature has specifically provided that
sale of goods from across the State lines are taxable? If you say they
are not taxable, you are flying right into the face of the will of the
people in your State who said they should be.
All I am saying, people should not be misled and should be told that
when
[[Page S11576]]
they buy this merchandise it may be subject to a sales or use tax. It
is just that simple. Why wouldn't you? If your State is one of the 45
States that have a tax, why would you not want a company selling goods
on the Internet--not mail-order houses on the Internet--why would you
not want to tell the customer he may be subject to it, instead of him
getting a rude surprise and some auditor knocking on his door?
I reserve the remainder of my time.
The PRESIDING OFFICER. The Senator from Oregon.
Mr. WYDEN. Thank you, Mr. President.
I strongly oppose this amendment. This amendment specifically singles
out those who sell goods over the Internet for discrimination. It
applies to one class of people and that is those who sell goods on the
Internet. The amendment would impose on those sellers of goods on the
Internet a new requirement that would not be imposed on someone who
sells goods over the phone or someone who mails the goods when they get
a check.
Now, let's picture the kind of person who is going to be hurt by this
amendment. My State, the State of the Presiding Officer of the Senate,
has 100,000 home-based businesses. These are some of the most exciting
businesses in the country coming up with new products. They are small.
They are entrepreneurial. If this amendment passes, those 100,000 home-
based businesses in Oregon--and there are thousands and thousands of
other home-based businesses across the country in States that we all
represent--they, and only they, will be subject to this new
requirement.
This amendment seeks to do what the Internet tax freedom bill seeks
to prevent. Our legislation is about technological neutrality. We
should treat the Internet like we treat everything else. It shouldn't
get a preference. It shouldn't be discriminated against. But if you
read section (a) of this amendment, you will see that it applies
requirements to one class of people, and one class of people only.
Those are individuals who sell goods over the Internet.
This is discriminatory. This does what our legislation seeks to
prevent. Those who vote for the amendment, in my view, in this
Senator's view, are fostering the kind of policy that is going to lead
to selective and discriminatory activity against those who sell goods
through the World Wide Web.
I yield back my time, Mr. President.
Mr. BUMPERS. Mr. President, I ask unanimous consent that my amendment
be expanded to include mail-order catalog sales.
The PRESIDING OFFICER. Is there an objection?
Mr. GREGG. I object.
Mr. BUMPERS. The reason there is an objection is because the Senator
from New Hampshire and the Senator from Oregon do not come from the 45
States that have sales taxes.
They are opposed to this because their State is not one of the 45
States that do have a sales or use tax. Secondly, the unanimous consent
agreement limits amendments to relevant amendments. If you put mail-
order catalog sales in, it is not relevant. That is the reason I
confined it to the Internet and asked consent to extend it. That is the
reason they objected. They don't have to face a legislature or people
back home who passed a sales or use tax on Internet sales coming in
from out of State, because their States don't have a sales or use tax.
My State does have that use tax, and we would like to collect it. Your
revenue departments and your Governors would like to collect it, too.
All I am saying is, Internet sales simply ought to state a simple
thing--that the goods you are buying could be subject to a use or sales
tax in your State; if you want to know whether it does or not, contact
your local revenue department. What is wrong with that? Who can oppose
that? The taxes have already been passed by the legislature. It is just
that they can't collect it unless they stand at the border and
intercept every piece of merchandise that comes through the mail or on
the highway. They can't do it.
So all I am saying is, if these 45 States have seen fit to levy taxes
on out-of-State sales to make the playing field a little more level
with the main street merchants, we ought to give them such help as we
can. I am saying they ought to at least advise these people that these
purchases might be subject to a use or sales tax.
Mr. President, I am prepared to yield back the remainder of my time
if everybody else is, and we will go to a vote.
Mr. GREGG. Mr. President, I move to table the amendment of the
Senator from Arkansas and ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.
The PRESIDING OFFICER. The question is on agreeing to the motion to
table the amendment of the Senator from Arkansas. The yeas and nays
have been ordered.
The clerk will call the roll.
The assistant legislative clerk called the roll.
Mr. FORD. I announce that the Senator from Ohio (Mr. Glenn) and the
Senator from New York (Mr. Moynihan) are necessarily absent.
The PRESIDING OFFICER. Are there any other Senators in the Chamber
desiring to vote?
The result was announced--yeas 71, nays 27, as follows:
[Rollcall Vote No. 300 Leg.]
YEAS--71
Abraham
Akaka
Allard
Ashcroft
Baucus
Biden
Bingaman
Bond
Boxer
Brownback
Burns
Campbell
Chafee
Coats
Cochran
Collins
Coverdell
Craig
D'Amato
DeWine
Dodd
Domenici
Enzi
Faircloth
Feinstein
Frist
Gramm
Grams
Grassley
Gregg
Hagel
Hatch
Helms
Hutchinson
Hutchison
Jeffords
Kempthorne
Kerrey
Kerry
Kohl
Kyl
Lautenberg
Leahy
Lieberman
Lott
Lugar
Mack
McCain
McConnell
Moseley-Braun
Murkowski
Murray
Nickles
Reid
Robb
Roberts
Roth
Santorum
Sessions
Shelby
Smith (NH)
Smith (OR)
Snowe
Specter
Stevens
Thomas
Thompson
Thurmond
Torricelli
Warner
Wyden
NAYS--27
Bennett
Breaux
Bryan
Bumpers
Byrd
Cleland
Conrad
Daschle
Dorgan
Durbin
Feingold
Ford
Gorton
Graham
Harkin
Hollings
Inhofe
Inouye
Johnson
Kennedy
Landrieu
Levin
Mikulski
Reed
Rockefeller
Sarbanes
Wellstone
NOT VOTING--2
Glenn
Moynihan
The motion to lay on the table the amendment (No. 3742) was agreed
to.
The PRESIDING OFFICER (Ms. Snowe). The Senator from Arizona.
Unanimous Consent Agreement
Mr. McCAIN. Madam President, I ask unanimous consent that the Senate
remain on S. 442 for the purposes of offering a nonrelevant amendment
that has been agreed to by both sides, that the amendment be
immediately agreed to, and that the Senate return to morning business
under the previous order, except that the time be until 7:30 instead of
6:30, with no intervening action or debate.
The PRESIDING OFFICER. Is there objection?
Mr. DORGAN. Madam President, reserving the right to object. I will
not object. My understanding is the amendment that is to be offered has
been cleared with the authorizing committee, and we have no problem
with the amendment.
Mr. BYRD. Madam President, reserving the right to object.
The PRESIDING OFFICER. The Senator from West Virginia.
Mr. BYRD. I have no intention of objecting. I merely want a little
clarification on the time. Will that mean we have to wait until 7:30
and then may have a rollcall vote or so after that?
The PRESIDING OFFICER. The Senator from Arizona.
Mr. McCAIN. Madam President, it is my understanding that there will
not be the likelihood of further votes, but we will have to clear that
with the majority leader.
Mr. LOTT addressed the Chair.
The PRESIDING OFFICER. The majority leader.
Mr. LOTT. Madam President, who has the floor? The Senator from
Arizona?
Mr. McCAIN. I yield the floor.
Mr. LOTT. We are trying to get final clearance on the antinepotism
bill. We think there is a probability that we would not have to have a
recorded
[[Page S11577]]
vote. But that is what we are trying to do right now; we are trying to
make sure everybody is satisfied with that. If we could get that
cleared, move it on a voice vote, then we would have no further
recorded votes tonight. We are not able to announce it at this moment,
but we believe within the next 5 or 10 minutes we will be able to make
that clear.
I see the Senator from Vermont just came on the floor. He was one of
the ones we were wanting to get some information from about the
antinepotism bill, being able to take it up, and whether or not a
recorded vote was going to be necessary on that.
The PRESIDING OFFICER. The Senator from Vermont.
Mr. LEAHY. Madam President, I tell my friend from Mississippi, we
discussed, last night, what we were trying to do, as he knows. The
Senator from Arizona has been most helpful in trying to help this
along, to get the antinepotism bill up, but also have the time to do
the Fletcher nomination.
What I understand the Senator from Mississippi and the Senator from
Arizona want to do is to get something locked in so we can take care of
both those.
There were some who wanted a rollcall vote on the nepotism bill. Is
the distinguished leader saying it would be easier for his scheduling
if there was not one? I came to this conversation late; I apologize.
Mr. LOTT. I believe it will be better from a scheduling standpoint;
therefore, we can advise Members what they can expect for the remainder
of the evening and we can get this legislation completed. Then we will
be able to go to the Fletcher nomination tomorrow.
Mr. LEAHY. I ask my good friend, the distinguished leader--and we
have been friends for a long time--do I detect a hint in that
suggestion of being able to tell Members there may not be further votes
if we voice vote the nepotism bill?
Mr. LOTT. That was very much an implied hint.
Mr. LEAHY. I think I can tell my friend from Mississippi we can
overcome those who are requesting a rollcall vote on this side. But we
do want a specific time for a vote on the Fletcher nomination, and I
rely on the distinguished leader to work this to a time convenient for
scheduling. It is, of course, with the understanding that there will be
a time set down for a vote on Mr. Fletcher that we would be able to
reach an agreement.
Mr. LOTT. That is my intent, and, as the Senator knows, I had made a
commitment earlier we were going to do that. I will keep that
commitment. It is my intent to have that vote tomorrow, or the next day
at the latest. We will have a vote on that nomination.
I thank Senator Kyl also for his effort. I say to all Members, if
they will bear with us just another 5 or 10 minutes, we will be able to
make it official that we won't have a recorded vote.
I yield the floor.
Mr. BYRD addressed the Chair.
The PRESIDING OFFICER. The Senator from West Virginia.
Mr. BYRD. Madam President, I withdraw my reservation.
The PRESIDING OFFICER. Without objection, it is so ordered.
Amendment No. 3743
(Purpose: To provide support for certain institutes and schools)
The PRESIDING OFFICER. The clerk will report the amendment.
The legislative clerk read as follows:
The Senator from Arizona [Mr. McCain], for Mr. Frist, for
himself, Mr. Thompson, Mr. DeWine, Mr. Jeffords, Mr. Smith of
Oregon and Mr. Wyden proposes an amendment numbered 3743.
Mr. McCAIN. Madam President, I ask unanimous consent that the reading
of the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
(The text of the amendment is printed in today's Record under
``Amendments Submitted.'')
Mr. McCAIN. Madam President, I ask unanimous consent to add Senator
Smith of Oregon and Senator Wyden as original cosponsors of this
amendment.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. McCAIN. Madam President, I ask unanimous consent that Senators
Gregg and Lieberman be considered original cosponsors of amendment No.
3722.
The PRESIDING OFFICER. Without objection, it is so ordered.
The PRESIDING OFFICER. The question is on agreeing to the amendment.
The amendment (No. 3743) was agreed to.
Mr. McCAIN. Madam President, I move to reconsider the vote by which
the amendment was agreed to.
Mr. BYRD. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
____________________